High-profile Melbourne pub owner under fraud investigation

Chris Vedelago

One of Melbourne's most respected publicans is being investigated over allegations that he stole $3.5 million to help prop up his failing hotel empire and fund a lavish lifestyle.

Hospitality sources have described the collapse of Michael Reardon's pub group as one of the ''worst cons'' yet seen in Victoria's hotel industry, with scores of staff and creditors owed at least $11.2 million by the bankrupt entrepreneur.

''People trusted this man - he was influential and very well thought of, but he just took advantage of people,'' said veteran publican Mag Kearney, who locked Mr Reardon, 53, out of the Clyde Hotel, Carlton, after he allegedly repeatedly failed to pay the rent.

Michael & Rosemary Reardon.

At the height of his influence, he owned or ran at least nine inner-city and regional watering holes, including the Palace Hotel and Rising Sun, South Melbourne, Swallows in Port Melbourne, All Nations in Richmond, Carringbush Hotel in Abbotsford, and the Criterion and Churchill hotels in Gippsland.

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But victims allege that Mr Reardon, also an accountant, had been pilfering money from clients for more than five years to keep the pubs afloat and splash out on overseas holidays, cars, racehorses and a $2.3 million mansion in Carlton North.

Former pub staff are also believed to be owed tens of thousands of dollars in superannuation benefits, as Mr Reardon failed to pay any employee entitlements at some of his hotels, corporate investigators have found.

Carringbush Hotel in Collingwood.

''I worked for Reardon for more than three years at two different pubs, and it turns out I wasn't paid any super for the entire time I was there,'' one former employee said. ''There would be quite a few other employees in the same boat.''

Lenders, company administrators and victims have been systematically repossessing or freezing the business and personal assets of Mr Reardon and his wife, Rosemary. They include cars and six properties in Carlton North, North Melbourne, Fitzroy North, Brunswick and Mansfield.

But the move may have come too late for one Melbourne family, which is being forced to pay a multimillion-dollar tax bill twice because the accountant allegedly misappropriated money they owed to the Tax Office. Brothers Paul, David and John Digney are suing Mr Reardon, after an audit revealed nearly $3.5 million entrusted to his firm MH Reardon & Associates was never received by the Tax Office. Ms Reardon has also been named as a defendant in the suit.

Some of the money was allegedly diverted to businesses associated with the Reardons, according to documents filed in the Supreme Court. But much of the missing funds remain unaccounted for.

''I am trying to get to the bottom of what has happened with all the [tax] returns and the money that went with them. I do not have the money and expect it went to wrong accounts,'' Mr Reardon allegedly said in a text message to Paul Digney, according to court documents. But former friends and business associates say the Reardons had a noticeable penchant for high living.

''During the nearly 20 years that I have known Reardon and Rosemary, they have led a very luxurious lifestyle including the purchase of multiple luxury cars, several annual overseas holidays, skiing holidays with Rosemary's extended family and the purchase of racehorses,'' Peter McMahon, Mr Reardon's former partner in the Carringbush Hotel, said in an affidavit.

NAB, St George and CBA are also named as defendants in the legal action over claims their negligence allowed Mr Reardon to create fake trust accounts to siphon client money without being detected. The scandal has sent shockwaves through Melbourne's tight-knit hotel industry, where Mr Reardon had a reputation as a savvy businessman and skilful accountant.

''A lot of people put a lot of trust in him,'' one hotelier and long-time client told The Sunday Age. ''He had a reputation as someone who understood how the pub business worked. But we found out later he didn't hand over our refunds from the ATO and didn't deposit the money we gave him for a superannuation investment.''

A police spokeswoman confirmed the fraud and extortion squad was investigating the activities of a North Melbourne accountancy firm.

Mr Reardon, who was declared bankrupt in June, did not respond to requests for comment. Company documents show he transferred his shares in a series of businesses to his wife just days before the bankruptcy.

The couple claim to have been estranged but living in the same house for more than five years.

In Supreme Court documents Rosemary Reardon has denied responsibility for the family's business operations, despite financial records showing she has acted as a director and loan applicant for a number of the companies since 2006.

''I was not aware of the extent of the trouble my husband was in, and he kept telling me that all was in order and that he would fix things,'' she said.

Ms Reardon, who did not respond to a request for comment, remains the owner of the All Nations Hotel, in Richmond, which sources say Mr Reardon continues to run. Creditors are believed to be preparing to seize it.